Panama Investor Blog

Where is a safe place to put my money?

Almost everyday I 'm asked that question. Being a successful inventor, developer and blogger, many people think I might know something they don't about protecting my wealth. Well, the fact is that I do know something about it and I want to share it with you. I truly believe if you fail to take action to protect your wealth soon, you may lose whatever you have managed to accumulate.  I don't usually promote anything but me on my blog site, but the world economic situation is getting so dire that I feel remiss if I don't share this new discovery with my readers.

My answer on how to protect wealth, big or small, is to buy gold. Of course gold is not new, but the way you can buy, own and store it is. There are many reasons I can site about why gold is the safe place to protect your wealth, but the fact that gold is increasing steadily in value against all currencies should be good enough reason for now. I believe that all currencies will soon fail and only the precious metals will hold their value as they have done over the centuries. Gold buyers have been rewarded in the last few years with significant gains while all other forms of investment have faltered. Now more than ever I advise my family, friends and anyone who asks me, to buy gold and store it in a safe place.

Wheres a safe place? I have had some very wealthy friends who say that storing gold in any quantity is dangerous, expensive and difficult to liquidate, and in the past they were right. I have held pool accounts with various private companies and government mints over the years and it is a real pain to buy and sell. Today I find that the mints will not sell direct less than $500,000 and then it is kept in an unaudited and unallocated "pool account". If you want physical deliveries you can wait months and the transaction or minting fees are prohibitive.

But as gold has become a much sought after haven in recent years, entrepreneurs have come up with a convenient and safe way to buy, sell and store any portion of numbered gold bars OFFSHORE in one of three secure vaults that are audited daily. Now, I  buy gold on the London Exchange and store it in  a Swiss vault with a mere push of a button on the Internet at a very low transaction fees. When I need cash I just reverse the procedure and the money is wired to my bank account within just a few days. I can go online and view an audit of my gold held in storage that is allocated to my account with the serial numbers of the 400 ounce bar I own a part of.

The fact is I sleep better knowing my money is held in gold than in dollars, pesos, balboas or anything else I can wad up and stick in my pocket. I don't worry about the price of gold each day. I care more about the value of the dollar against the gold because it is a yardstick for how sick our economy really is.

If I can encourage you to do one thing right now, no matter how few or many dollars you might have, put some or all of it into gold. You will sleep better and really protect your wealth. And if you want to learn more about how I do it in a safe, secure and easy way, continue reading.

Ship owners call for Panama toll cuts

Things seem to be heating up on the canal toll increase issue with this latest salvo from ship owners. I have read elsewhere where Panama thinks it may gain with the world economic downturn because of its strategic position and that there are few economic alternatives for shippers. I really don't know enough about the shipping route dynamics, but I do know that the canal expansion project required continued increased transits and increased tolls to be feasible. Based on the world situation, one would have to come to the conclusion that economic feasibility is not the most important factor governing the project.

Excerpts; From Lloyds lists
Excerpts: Janet Porter - jueves 29 enero 2009

SHIPOWNERS are urging the Panama Canal Authority to cancel planned toll increases while cutting more Suez Canal transits as soaring costs and collapsing markets threaten to drive some operators out of business. BIMCO, Intercargo, Intertanko and the International Chamber of Shipping have written to the ACP warning that there were now "serious concerns about the industry's ability to sustain a further increase" after significant price hikes over the past two years.

The letter to ACP administrator Alberto Aléman Zubieta said the economic landscape has changed considerably since the three year programme of increases was first announced two years ago.

"The current global economic crisis has already had a severe effect on many ship operators — freight rates and volumes in most sectors have been badly impacted and the severe downturn is expected to last throughout 2009 and well into 2010," the Round Table group told Mr Aléman.

"In the space of a very short period of time, the situation has changed so rapidly that some regular services have already been cut and there are fears that some owners/operators will not survive."

Is property outside Panama City still selling?

An article in this morning's La Estralla puts forth the idea that although the city speculative market has dried up, the projects scattered around the country are still doing well. I would have to argue this assumption because I hear from many developers and buyers on a daily basis.

There are few second home buyers or speculators looking around Panama. We still see a flow of people looking for a safe haven for a primary home, but they want bargain prices. Many still have to unload unsalable properties back home. Just because projects are continuing construction does not mean the sales momentum has continued. Many projects have the initial sales and bank commitments to complete, but unless there is a lot of interest from new buyers this will soon end.

The case in point is the project sighted in the article, Isla Saboga which is next to Contadora. I am familiar with the project because I worked with the land owner to locate and contract the current developer over three years ago. The project had all the right ingredients for success. A beautiful island with a power generation plant, fresh water, close to an airport with scheduled flights, small village where labor is available etc.. The main challenge the developer has encountered is one of timing. It has taken so long to get the project underway that the market conditions are no longer viable. Now instead of developing the property, they are looking to get some other party to come in and take the risk even offering to finance the property as well. How successful they will be in this tumultuous market remains to be seen. Few developers are interested in new projects in this economic environment and fewer still will be in a position to get financing for speculative development.

There are literally dozens of projects scattered around the country in a similar situation where they waited to long to get underway and now there are few buyers and no funding available for construction even if they had buyers. Projects that are well underway with infrastructure and amenities already in place have a much higher chance of continued success, but they will find market pressure on pricing as buyers know that cash is king. Few buyers are now willing to risk buying a home to be built in the future along with the many amenities shown in the brochures and on-line computer generated graphics. I don't expect things to change much in the near future. All developments must have sales and construction momentum to succeed. Projects that take forever to get out of the gate and then just drag on are doomed for failure.

Grooming island for investors

01-26-2009 | MARIJULIA PUJOL LLOYD

[email protected]

In the middle of a crisis, a company is setting up the necessary infrastructure in Saboga in hopes of attracting property developers

Panama Star The representative of the Isla Saboga project, Armel Gonzalez Muhs said that in the long term his company is planning to invest $1.5 billion to create an island paradise that will have hotels, restaurants, houses, condominiums, spas, a marina, a yacht club, a country club, and a beach club within ten years.

Gonzalez explained that his company is not planning to build anything per se, but is putting in place all the permits and regulations and establishing relations with the islanders, in order to sell it to investors and property developers, who can then carry out different projects.

Isla Saboga company is going to give financing to those people who want to invest in this project, but investors will have to follow the rules of the organization.

Currently Saboga has over 100 inhabitants that earn their living fishing, transporting tourists who are island hopping, extracting sand which they sell to developers and working on construction on the bigger island of Contadora.

The island lacks water, roads and the sewer system is non existent, but the organization said that it will invest $20 million creating the necessary infrastructure, that will not only benefit the inhabitants, but also possible future developments. The project contemplates job creation in hotels, restaurants and other similar facilities, as well as the creation of training centers to give trade to the islanders.

The concept of Isla Saboga will be completely environmentally friendly, with spas with a holistic approach and integrating the community into the project.

Gonzalez did not reveal how much his company paid for the island, but claimed that it has already managed to sell 20 percent of the project.

Las Perlas Islands have gone through an unprecedented development over the last five years, but only time will tell if there is space for new ones at a time when the financial crisis has meant the cancellation of some projects before they start.

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DEVELOPMENT IN PANAMA

Every single beach, mountain and jungle in Panama appears to have some sort of development going on. While in the capital city projects are being suspended for lack of buyers, in the interior they seem to be progressing well.

On the negative side, some investors are staying away, wary about the current financial crisis and the repercussions it may have in the future, especially when it is obvious that the real estate boom appears to be coming to an end in Panama.
However, the new projects that are sprouting up on beaches and islands are showing that foreign property developers believe in Panama and its potential as a tourist destination, but tourists will only come if they have enough money to invest on a holiday.
MARIJULIA PUJOL LLOYD

Comments on Dubia's downfall

The International Herald Tribune Blog by Kevin Brass carried a post about several major project cancellations in Dubai. Of greater interest to me are the comments to the article by people at ground zero in Dubai. It is amazing that there are few articles about the real problems being experienced by property buyers and very little main stream press about the markets demise in these once highly touted areas of growth.These comments readily apply to what is happening in Panama too.

FROM IHT

The market there is a complete mess, and begging for good governance. In no particular order - here’s what’s happening. Dubai and Ajman leads the pack.

1) Change of tack in visas - after years of promising it - a 180 degree turn in policy means a smaller potential buyer pool.
2) Thousands and thousands of undelivered projects, which in turn creates and artificial shortage. It also creates tremendous uncertainty
3) Un regulated developers - that don’t own the land, have no intention of starting construction. The law doesn’t force them to. Instead, they embezzle the money, or use it for marketing etc.
4) Contracts are routinely delayed from when the booking deposit is put down….and when it does show up, totally diverges from what is advertised, promised.
6) The developer requests post dated cheques that are impossible to stop, for any reason.
7) A regulator (RERA) that is primarily focused on developers and creates a smokescreen of protection, that soon evaporates. Even cases where RERA has ruled in favor of the end investor, developers openly continue to flout rules.
8) Even the big developers are stuck for cash, and thus not issuing refunds on projects that they have canceled.
9) The whole game was dependent on thousands of new buyers coming in and making down payments, but in the current environment and given all of the local uncertainties that has stopped.
10) Unregulated construction standards and out of control maintenance charges.

Markets everywhere are impacted by the global crisis - but much of what is listed above is locally created.

Buyer beware - but if you have a very compelling reason to buy - check the various online forums, get a lawyer, don’t use post dated cheques - and stay away from off plan.

Lastly, I am honestly stunned that none of the worlds major newspapers have picked up on any of this and say written about this in the Western media. You’d all be doing your readers a favor, by doing some objective research into this.

Immigration options for Panama

It is my bet that as the economy deteriorates in the city and the country as a whole, Panama will offer even better immigration options in the future. It is natural when things are going well that they make the doorway narrow, but the reverse is true when things take a turn for the worse. This is from Pardini website so if you have a questions you can go directly to them.

Pardini & Asociados

New Regulations of the Immigration Law

By means of Law Decree No. 3 of February 22nd, 2008 and the executive decree No. 320 of August 8th, 2008, the Panamanian government approved the new immigration law and its regulation that entered into force as of August 26th, 2008. The new legislation modifies existent visa programs and creates new programs in accordance to existent economic and political situation of Panama. The most outstanding changes by new migratory regulations are: -  Simplifies migratory categories -  Changes in government fees and expenses -  Strict penalties for illegal permanence within the country -  Creation of new temporally residence visas -  The Increase of funds required in order to apply to some visa programs Migratory categories The new rules simplify the categories in non residents, temporally residents and permanent residents. Non Residents Visa Tourist:  Visitors are allowed to stay up to 90 days within the Panamanian territory.  The stay allowed will depend upon immigration officers and country of origin. Short Stay Visa: These visas are granted up to 9 months to visitors willing to carry out different activities such as: -      Setting business subsidiaries or branches in Panama -       Relatives visit -       Scientist and research -       Medical treatment -       Potential Investments for call centers, exporting processing zones, film industry -       Natural disasters refuges -       Potential  investments in Banking sector Temporally Residence Visa ·         Employment: These visas are granted up to 6 years (renewal every year) to petitioners hired  or to be hire within the following sectors: - Colon Free Zone Executive: Minimum salary US$ 2,000.00 - Employees within 10% workforce: Minimum salary US$ 850.00 - Expert or technical staff within 15% workforce:   Minimum salary US$ 850.00 - Workforce hired in accordance to Marrakech Accord:   Minimum salary US$ 1,000.00 ·         Investments: These visas are granted up to 6 years (renewal every 2 years) to petitioners willing to invest within the following activities: -  Agriculture Investor: Investment of US$ 60,000.00 -  Film making industry:  Labor contract -  Executive for International Companies    (activity must take effect out of Panamanian territory): Minimum salary US$ 1,000.00 -  Multinational Regional Headquarter employees:  Salary must be paid from abroad. Permanent Residence ·         Economic reasons: These visas allows  petitioners to obtain permanent residence by fulfilling the following proceedings: 1.   Filing a residence permit  for 2 years 2.   Filing a permanent residence petition 3.   Filing a petition for the procurement of citizenship Programs -  Reforestation:  Investment US$ 80,000.00 -  Large Investor:  Investment US$ 160,000.00 -  Self Sufficient funds (Person of means):    300 K CD deposit, 300 K real estate purchase or mix    investment (CD deposit & real estate purchase) ·         Special Policies :These visas allows  petitioners to obtain permanent residence by fulfilling the following proceedings 1. Filing a residence permit  for 2 years 2. Filing a permanent residence petition 3. Filing a petition for the procurement of citizenship Programs -  Retired Annuitant Visa (2nd Passport):    set a CD deposit that produces US$ 2,000.00 interests per month -  Tourist Pensioned: pension of US$ 1,000.00 per month ·         Other Permanent Residence Programs: These visas allows  petitioners to obtain permanent residence by fulfilling the following proceedings Programs -  Employees hired as permanent staff of Panama canal authority:  Labor contract -  Panama Pacific Investor:  Investment US$ 250,000.00 -  Employees hired as permanent staff of an operator in     the special economic area (Panama-Pacific): Labor contract -  Export  processing zone investor: Investment US$ 250,000.00 -  Film making industry investor:  Investment US$ 150,000.00

Source of this article :

Indians flee Dubai as dreams crash

As they flee they abandon their cars at the airport with the keys in the ignition. The construction and real estate party is over and Dubai is reeling. The bigger they are, the harder they fall. At least they can still go snow skiing!

Excerpts: from Daijiworld: Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight.

The global economic crisis has brought Dubai's economic progress, mirrored by its soaring towers and luxurious resorts, to a stuttering halt. Several people have been laid off in the past months after the realty boom started unraveling.

Faced with a cash crunch and a bleak future ahead, there were no goodbyes for the migrants -- overwhelmingly South Asians, mostly Indians - just a quiet abandoning of the family car at the airport and other places.

"The construction and real estate industry has been hit following the global slowdown and the direct fallout is that professionals working in the realty industry are rapidly losing their jobs," said a senior media professional, in-charge of a realty supplement in Dubai. "In fact, my weekly real estate supplement usually had 60% advertisement and ran into 300-odd pages. In the last seven weeks, it's down to 80 pages and with fewer advertisments," he added.

Panama Condo fire sales coming soon

This is not my headline, but that of La Estralla. Seems the main stream Panama press has finally caught on to the fact that the game is over. Lets see how this auction idea develops.

Excerpt from La Estralla: A U.S. auction company, J.P. King Auction Company Inc. after a successful time in the depressed Maxican market, spotted the niche in Panama and is planning to hold a sell-off of luxury condominiums, apartments and premier houses at the end of April.Gilbert said that the timing is right for an auction because the real estate market has decelerating and a properties sell-off might be a way to revive it.

“I don’t think that the traditional method of selling properties will be successful in the future. Foreign buyers have been affected by the global economic crisis and are reluctant to pay the full asking price for a particular condominium. However in an auction they will have the opportunity to bid for a home at a reasonable price,” said Gilbert.

The auction will create a sense of urgency that will force, international buyers, to come to Panama to participate.

Bank confidence slipping?

Although as I wrote in an earlier post, consumer confidence is still high, this is apparently not the case for those involved in Panama's banking sector. On the face of it a emergency stimulus plan sounds like a good idea, a $1.1 billion dollar "first phase" stimulus plan is only put in place when things aren't going so well.

Excerpts: from Latin Herald Tribune:

President Martin Torrijos presented a $1.11 billion stimulus program intended to insulate Panama's economy from the worst effects of the global downturn.

Torrijos insisted the stimulus plan was not "a program of subsidies or financial bailout" but an initiative to "ensure stability and growth with the aim of maintaining the employment and economic activity achieved in recent years."

He also stressed that the stimulus package would not increase public debt.

The $1.11 billion for what Torrijos called the first phase of the program is to come from state-owned Banco Nacional de Panama, the Andean Development Corporation and the Inter-American Development Bank.

"Panama is better prepared than at any other time in his history to face a situation of this nature: ample and growing reserves in the BNP; liquidity levels in the banking system beyond what is required by law; a budget surplus for the last three years; public and private investment projects that will implemented in the coming months, including the canal expansion, and greater income for Panamanian consumers," Torrijos said.

He acknowledged, however, that the Central American nation could not completely escape the effects of the world recession. EFE

Consumer confidence high in Panama

Although the rest of the worlds consumer confidence may be in the toilet, Panama's is still riding high. As this particle points out, it is due partially to a 13th month year end mandatory bonus and Panamanian's belief in a brighter future.

Excerpt From La Estralla:

Jacques de Raucourt of GFK Marketing Group, the company that carries out the consumer’s confident surveys for the Panamanian Chamber of Commerce said the increment of the index in Panama was directly related to the high level of commercial activity in December, mainly because during that month the Panamanians receive more income, like the 13th month payment and other incentives.

Consumers expectations about the financial situation of their homes went up to 118, five points higher that in November, which indicates optimism for the future.

Ship builders see cancellations of post Panamax vessels.

Another reason given for the justification of the canal expansion project has been the need to handle larger ships being built that can't pass through the existing canal. Due to the economic conditions ship builders are seeing a large number of cancellations of these large bulk carriers. Obviously the shipping companies don't see things turning around any time soon as these huge vessels take years to construct.

Excerpt from Forbes: DryShips also nixed its planned $1.17 billion purchase of nine new Capesize vessels, pointing to the steep drop in charter rates and ship values in recent months. The global credit crisis pushed down values of ships dramatically, because letters of credit - which are required in a majority of shipping deals - were increasingly hard to secure. Drybulk shipping rates had also been hurt by slowing global demand and slipping commodity costs.
Read the rest of the story here